by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
The minimum wage makes it harder to employ the poorest and least skilled by pricing them out of the job market.
When the law does that, all that is left — based on the assumption that accepting fate and starving to death is counter to the primal human impulse to survive — then what is left is breaking the law.
Economist Mark J. Perry writes:
The direct and immediate consequences of a higher wage floor on the entry-level job market are well known: fewer jobs for fewer people. Less discussed are the longer-term adverse outcomes for young people who can no longer find work at artificially high wages. …
By significantly reducing job opportunities at the bottom end of the career ladder, a higher minimum wage increases the likelihood that unemployed teens will seek income elsewhere. A 2013 study by economists at Boston College analyzed increases in state and federal minimum-wage levels between 1997 and 2010. It found that low-skill workers affected by minimum-wage hikes were more likely to lose their jobs, become idle and commit crime. The authors warn that their results “point to the dangers both to the individual and to society from policies that restrict the already limited employment options of this group.”
This troubling outcome is one that U.S. cities can barely afford. North Philadelphia already struggles with some of the city’s highest rates of violent crime. In 2016 homicides in Philadelphia are up 10% over this time last year, and other U.S. cities are facing similar challenges. A May report from the Congressional Budget Office finds that one in six young men nationwide is either unemployed or incarcerated; among young black men, this figure jumps to nearly one in three. The CBO report pointed to higher minimum wages as one possible cause of this crisis.
The solution to high rates of youth crime and youth unemployment is a job, not a government-mandated raise in wages. A 2014 study published in the journal Science analyzed the impact of a summer jobs program in Chicago on the criminal activity of more than 1,600 disadvantaged high schoolers. For those teens who participated in the jobs program, there was a remarkable 43% reduction in arrests for violent crimes (nearly four fewer violent crime arrests per 100 teens) during a period of more than one year after the program ended.